How is an agent's apparent authority generally established?

An agent's apparent authority is generally established through the principal's actions that lead third parties to believe that the agent has the authority to act on behalf of the principal. This concept is grounded in the principle of estoppel, where the principal cannot deny the agent's authority if their conduct created a reasonable belief in the mind of a third party that such authority exists. For instance, if a principal allows an agent to consistently engage in certain practices that suggest they have the authority to make decisions or enter contracts, those actions serve to create apparent authority in the eyes of anyone interacting with the agent.

This understanding emphasizes the importance of the principal's behavior and public representations in shaping perceptions about an agent’s authority, rather than relying on formalities such as written agreements or direct communications between the principal and agent. The power of apparent authority is significant because it protects the interests of third parties who rely on the apparent authority in their dealings, thus ensuring fairness and preventing unjust harm.